Understanding Socially Innovative Investing

Socially Innovative Investing (S2I), a proprietary strategy developed by U.S. Trust, is based on a growing awareness that strong corporate financial performance and social responsibility are not mutually exclusive; rather, they are mutually beneficial qualities. For investors, S2I seeks to answer yes to an age-old question: Is it possible to do good and do well at the same time?

Utilizing the Principle of Shared Value

The idea of investing according to personal values and beliefs is hardly new. At least since the mid-18th century, when Quakers banned followers from participating in the slave trade, individuals and groups have periodically chosen to avoid investments that conflict with moral, religious, environmental or other values.

This approach to investing, now often referred to as socially responsible investing, or SRI, is viewed largely in terms of what it doesn't do. Investors choose what not to invest in — such as tobacco, weapons manufacturers and alcohol. And, because SRI entails limiting the universe of potentially profitable investments, the implication is that though this might be a noble endeavor, the investor is doomed to lower returns.

As interest in SRI has continued to grow, a new, more active and demanding approach to social investing has emerged. Dr. Michael Porter, of the Institute for Strategy and Competitiveness at Harvard Business School, summed up this new idea: "Corporate Social Responsibility can be much more than a cost, a constraint or a charitable deed — it can be a source of opportunity, innovation and competitive advantage."

Inspired by those words, U.S. Trust has created Socially Innovative Investing, which takes traditional socially responsible investing a step further. S2I incorporates an active, proprietary method for reviewing U.S. securities across a wide spectrum of criteria that weight both social responsibility and financial fundamentals .To be considered for inclusion, companies must be attractive fundamentally, as well as fit global macro investment themes established by U.S. Trust's thought leadership team. During the portfolio construction process, sector weights adhere to U.S. Trust's recommendation.

For more information, please contact your U.S. Trust representative.

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The Socially Innovative Investing Strategy is based on a growing awareness that strong corporate financial performance and social responsibility are not mutually exclusive; rather, they are mutually beneficial qualities.

The Fixed Income Socially Innovative Investing Strategy: offering bond investors a customized portfolio that conforms to their personal goals